Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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WikipediaHenry Blodget (born 1966) is an American former equity research analyst, currently banned from the securities industry for lying in his stock analyses, who was senior Internet analyst for CIBC Oppenheimer during the dot-com bubble and the head of the global Internet research team at Merrill Lynch. Blodget is now the editor and CEO of The Business Insider, a business news and analysis site, and a host of Yahoo Daily Ticker, a finance show on Yahoo.

One of the biggest challenges for the U.S. going forward is the country’s massive debt and deficit problem.

Right away you know you are about to read bullsh*t, since as you will see, the so-called “problem” never is identified. It only is criticized for being “massive,” as in: The U.S., being a “massive” nation, has created a “massive” amount of dollars. And this is a “massive” problem.

The U.S. government is currently spending about $1 trillion more every year that it takes in, and we’ve now piled up $16 trillion of debt. So far, this debt burden has been sustainable, but only because interest rates are at generational lows. If and when our creditors wake up and start demanding higher rates of interest, our ballooning debt-service costs will quickly swamp everything else in the budget.

Henry made a “massive” amount of money by lying, and he just can’t get out of the habit. The “debt burden” is sustainable because it isn’t a burden. Federal debt simply is the total of deposits in T-security accounts at the Federal Reserve Bank. I never have heard of a bank complaining that its deposits weren’t sustainable. In fact, though banks no longer give away toasters for deposits, they still solicit for deposits.

Blodget is waiting for poor, sleepy China et al to “wake up” to the notion that interest rates are low, something he suggests is a secret from the Chinese, though obvious to every other human on this planet. And when China et al “wake up,” Henry expects them to demand higher rates, or else . . . or else, what?

Will they stop buying T-securities? No, but if they did, who cares? China’s dollars go into China’s T-security account at the FRB, and there they reside, until the T-securities mature, at which time, China takes their dollars back. Never does the U.S. Treasury receive or even need those dollars.

A mere glance at the federal budget reveals to any reasonable human being that we can’t go on like this.

A “mere glance,” and a crook, might say that, but an honest, informed analysis says the opposite. There is zero possibility the FRB will be unable to pay China et al back, or create sufficient dollars to pay interest. No taxes needed.

And yet, so far, our elected leaders have refused to do anything about it. Instead, our elected leaders have formed themselves into two ideologically-driven camps that, like groups of children, refuse to compromise. The Republicans want to fix the debt by cutting spending. The Democrats want to fix the debt by raising taxes, especially on rich people.

Well, yes, if you’re going to reduce the deficit, you have to cut spending and/or increase taxes. Duh. And, by the way Henry, either approach would bring on a recession.

And Henry, it’s not “especially” on rich people, it’s only on rich people. That’s the real problem, isn’t it?

And, for some reason, our leaders seem to think it is okay to simply hunker down and stick fast. Never mind that, with every day that goes by, our debt burden grows larger.

And never mind that a growing federal “debt” is required for a growing GDP. Henry, don’t you remember that GDP = Federal Spending + Non-federal Spending – Net Imports? Sure you do, but you don’t want to admit it.

The consensus of non-partisan economists (and reasonable people everywhere) is that the only way to solve our debt and deficit problem is to do it in a balanced way: To trim spending AND increase revenue.

Currently, government spending is running at about 24% of GDP, and tax revenues are only coming in at about 17% of GDP. The only way to reasonably expect those lines to cross is to reduce spending and increase revenue, perhaps converging at about 20% of GDP. And if we don’t agree on this soon and make the tough decisions necessary to gradually get there, our situation will only get worse.

Yes, to trim spending and increase taxes, aka “austerity” is a great solution – if you consider prosperity to be a problem and poverty to be a solution. And where did you get that phony 20% figure? You have no idea. It just popped into your head like your fake research numbers.

The good news is, reasonable people everywhere will now have the help of some of the country’s business leaders, who have formed a campaign to pressure Congress into coming up with a long-term deficit reduction plan.

According to the Wall Street Journal, about 80 CEOs have joined this group, which is dedicated to ending the deficit dysfunction in Washington. Politically, the CEOs hail from both sides of the aisle, but they’re united in this common purpose.

“There is no possible way; you can do the arithmetic a million different ways” to avoid raising taxes, said Mark Bertolini, CEO of Aetna. “You can’t tax your way to fix this problem, and you can’t cut entitlements enough to fix this problem.”

Translation: “About 80 rich people want to reduce federal spending (the vast majority of which benefits the poor and middle classes) and to broaden the tax base (to tax more poor and middle class people).” What a surprise that you and those 80 rich people would want to increase the income gap.

Jeffrey Immelt of General Electric (GE), J.P. Morgan’s (JPM) James Dimon and Honeywell’s (HON) CEO Dave Cote support this call for a balanced approached the deficit.

And these three gentlemen are widely revered for their humble, aesthetic lives and their concern for the welfare of the 99%. And, what is that “balanced approach” BS? Why not call it a “balanced budget“?

Oh, yeah. Economists now have come to realize that a balanced budget causes recessions, so the new euphemism is “balanced approach,” whatever that means.

But big oil executives, who fear higher taxes on their record profits, have not fallen into line on this push. For the sake of the country, let’s hope that support for this purpose only grows.

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6 Responses to –Honest Henry Blodget: Do you believe him?

As I see it, lying about national finances serves two purposes.
First, it keeps the public groveling before politicians. Imagine having a printing press in your home, and living in a city that can only use your currency. Imagine the power you would have by printing money for your personal friends, while telling everyone else that “we are broke.” Imagine how everyone would grovel at your feet, begging you to turn on the printing press, while you look down on them and try to keep from laughing as you claim that, “We can’t spend money we don’t have.”

Second, the lying maintains public cynicism, defeatism, and despair. When average people feel helpless and afraid, they become addicted to complaining. They only listen to what justifies their complaints. Hence average people love to hear the lie that, “We are broke.” Meanwhile everyone bickers, since everyone is an “expert” on the emperor’s new clothes. (Anyone can be an “expert” on chimeras.)

For example, media outlets frequently note that the rich avoid taxes. (Which is a good thing.) This makes average people complain, thereby blinding themselves to the fact that federal taxes are destroyed upon receipt, and that federal taxes suck money out of the economy, worsening the depression. Since the average person prefers to complain rather than understand, he feels small and helpless. He becomes dependent on his lying President and Congressman to “fix things.”

Moreover, when average people feel helpless and hopeless, they seek revenge by demanding that the federal government cut spending on the “freeloaders,” whoever they are.

If every American understood Monetary Sovereignty, then all would see that there is enough money to do whatever we want. Cynicism would evaporate. Prosperity would spread. The public would be empowered. We would still have politics, but politicians would have to work for their pay.

Of course, this is unacceptable to politicians and the “1%.”

My point is that average people pretend to want the truth, but most of them actually want nightmarish fairy tales. And most would rather be “right” than be prosperous.

Mark,
Excellent, just what I wanted. May I use your notes to comment on other blogs, esp. http://www.fixthedebt.org/blog They are spreading a lot of misinformation and seem to have attracted a lot of followers who seem to lap up every doom and gloom they come up with.
Talk about death by a thousand cuts. The nation is killing itself.

Yes fine. A couple of further thoughts…It is human nature to complain, but we enslave ourselves when we make complaining an addiction. We reject whatever does not feed our addiction. For example, if we are addicted to whining that the USA is “broke” and “in debt” and imperiled from “an unsustainable deficit” then we will reject everything that Rodger says. No matter how often Rodger proves that the US government is not in debt, and does not borrow its money, we will nonetheless respond, “I still say the government is in debt.”

This is partly the product of constant lies by media outlets, but it also stems from a widespread addiction to cynicism, which forms a web. For example, many people complain that U.S. tax dollars go to Israel. You can tell them that tax dollars are destroyed upon receipt, that Israel is Monetarily Sovereign and doesn’t need US revenue, and that most aid to Israel goes to U.S. contractors – but it won’t matter. “I still say we should stop sending out tax dollars to Israel.”

Each part reinforces all the other parts, thus: “I still say that the USA is in debt, the deficit is unsustainable, and we should stop sending tax dollars to Israel.”

Cynicism becomes a security blanket. People feel let down when they discover that the USA does not have a debt problem, or that “tax dollars sent to Israel” are meaningless. They feel bored without constant anxiety and moral outrage. “You mean the monsters under my bed were never there? The USA has no debt crisis? Social Security can’t go broke? Tell me it ain’t so! Give me back my security blanket.”

Recently Vermont Sen. Bernie Sanders released a report listing 18 CEOs that, Sanders says, paid zero federal taxes, but reaped gigantic refunds from the IRS. Sanders did this to highlight the hypocrisy of these same CEOs, who demand cuts to Social Security, Medicare, and Medicaid. That’s good, but Sanders relies on moral outrage, saying that the CEOs should “look in the mirror for the causes of America’s ballooning deficit.” Sanders’ moral outrage gets people riled up, but it blinds people to the fact that a ballooning deficit is not only a good thing, but must become much larger if we are to ease the depression. The USA does indeed have a deficit crisis. The deficit is far too low.

But people cling to their security blankets. They want the deficit reduced. Thus, they reject Rodger and cut their own throats.

Good comments all and an excellent post. Understanding monetary sovereignty must be preceded with understanding the disease of Xtrevilism and its use of the Noble Lie and Corporatism as a means to its end; a two tier global society of ruler and ruled. This is an intentional global herd thinning and economics discussions with so disingenuous and so co-opted a government only serve to dissipate one’s good energy. You cure the disease by constantly pointing out as you do here the incessant lies and hypocrisy but it is also time to take action outside of the corrupt system. We are many and they are few.